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Sunday, September 14, 2014




Disaster is Looming! Is it ISIS? Ebola Epidemic? Muslim Terrorist Attack? Solar flares or meteorites? What is the terrible Cataclysmic Event that will shake the earth?
No, No, No, the real danger is DEFLATION of EUROPEAN CURRENCY!!
What?

Some of my loyal readers ask me ‘what are you smoking, doc?’  I don’t but allow me to elucidate regarding current headlines…First,  the greatest danger to any viable economy anywhere around the world is DEFLATION.  When the value of the assets and currency ranks so low that no growth or consumption can exist, even marginally, then that country or countries (Europe) is in dire straits.  That means that no one can or will buy goods and bartering will become the official trade currency in the rise of inevitable ‘black markets’.  In more simple terms, no taxes can be collected; lazy, incompetent leaders and bureaucrats of the different EU countries cannot be paid; and the Holy Grail of Socialism [read France, Italy, Spain] disappears.
If you think that I might be exaggerating,  I will quote some points of recent monetary landmarks that were subsumed in the makeshift fabricated hysteria of “Terrorism” and “ISIS”.  In late August,  Mario Draghi, a well-coiffured Italian monetary expert  announced at the Jackson Hole, Wyoming’s  [looks like Atlantic City in the mountains] U.S. Federal Reserve’s Annual Conference that the German plan of austerity for Europe was not working.  The patient is dying, time for a respirator!  Europe, especially France, Spain and Italy are all at such a low rate of growth because no one wants to buy anything and they have no money with which to buy ‘nothing’, that quantitative easing will be initiated.

By allowing currency to flood the market as we did in America,  Draghi can in principle create inflation which would halt the deflationary spiral.  Sound feasible,  it worked in America and many other countries which had…… What?.... once again we come back to that nasty little problem-----It worked in those countries which had their own printing press so they could make as much money as they needed. 
So what’s the problem in Europe?
Germany! Once again, this financial behemoth that was destroyed more times than a tinker toy set has refused to allow any economic easing because historically Germany fears inflation.  Runaway inflation is what occurred in the Weimar Republic and then, Chancellor Hitler fixed that through Arbeit [work]; manufacturing Porche’s Volkswagens;  funding Thyssen-Krupp Armaments; and the rest is HISTORY—WWII.  You can see that Germany has a very good reason not to allow Draghi to implement  QUANTITATIVE EASING [buying state bonds thereby creating “inflation”].  
Currently,  I see a very dangerous scenario in all of Europe where Germany controls the printing press, particularly countries in the southern tier—Portugal, Italy, Spain, France, and even Ireland [bailed out twice from bankruptcy].
What should those countries do?

For years, I have been a proponent for the break-up of the European Union which has been nothing more than a bloated, unnecessary layer of less-than-useless bureaucrats who know nothing about the specific regions of the EU which they have to fund.  I would go further and encourage the different regions of the ersatz created Westphalian nation-states to break-up once again into manageable sections which can encourage on a more local level: entrepreneurship, agriculture and efficiency.
Why do the brave, efficient farmers of the Brittany in the north of France have to support the indolent, non-farmers of Spain and Ireland which is nothing more than a tax haven?  
Why does Toulouse in the Southwest of France not reassert it’s more venerable Languedoc heritage and it’s formidable economic engine of the Airbus which is partly owned by Britain, Germany, and England instead of having to support the deadbeat Hollande and his dysfunctional socialist party?  
Why does the industrial northern province of Italy [Milan] have to support the political corruptions of the southern part, Naples?

When I first created and wrote the Net Force Series twenty some years ago, the notion of CYBERNATIONS was paramount in my thinking.  I knew that through the increased importance of the internet and the greater integration of financial transactions across the world,  the 19th Century concept of the NATION-STATE, developed after the Congress of Vienna was long ago dead and buried.  More importantly, having lived in both France and Spain,  I knew that the entrepreneurial nature of each country could be released through the disintegration of both nations.
The EU was,  as  I have stated long ago,  nothing but a pathetic attempt by French Intellectuals to reign in the more formidable entrepreneurial nature of Germany.  I knew it would never work. Now with the imminent wave of deflation flooding over Europe,  my theories start to ring true. 
What is there to do?
Scotland must secede from England!
Catalonia and Basque Provinces must secede from Spain!
Milan and the northern provinces must secede from the moribund museum called,  Italy.
And Ireland must resort back to an entrepreneurial base that is not dependent on tax haven free dollars.

There is a reason why the Chinese do not… and will not suffer from DEFLATION! The CHINESE discovered the wonders of the printing press,  printing their way out of deflation and stagnation and even creating their own fiscal reported results, which they do all the time.
Europe, wake up before its too late! and before all your citizens are lining up in the bread lines of poverty. The World Economy is nothing more than an elaborate Ponzi scheme and Europeans are on the bottom.

   

19 comments:

  1. The Federal reserve can make as much money as it likes out of thin air and it will not result in inflation for several reasons. The first is that this money doesn't find it's way into the general money supply. These trillions in new monies merely stays in the accounts of mega-banks where it's used for speculation, leverage, to act as security for credit and margins, for insurance guantees....it doesn't increase the amount on the street.

    Secondly...

    Any central bank can make huge amounts of new currency without inflation so long as the product of the economy keeps up with the new amounts put into circulation. Inflation only happens under rare situations where large amounts of money are injected into the economy and the economy is shrinking, thereby causing a shrinking amount of product to chase larger and larger amounts of money, thereby devaluing the money.

    Those are extremely rare situations such as in the 1920s in Germany when their central bank had no choice but to print large amounts of new currency to buy fuel from overseas with money they didn't have because the French occupied the Ruhr and took as their coal to pay for reparations. Otherwise these examples are limited to despotic, idiotic latin American governments in the past which created huge amounts of money during economic collapses to try to prop up business investment...and this never works.

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    1. Or put another way....

      Inflation happens when new amounts of money are handed to consumers rather than investors.

      In the 1970s wage earners had their wages increase all the time due match inflation, but without any increase in their productivity. All that money paying for the same product, and in the hands of consumers paying more for the same product..

      That was inflationary.

      But giving more money to investors isn't inflationary because they don't use the money to bid up the prices of goods.

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  2. Now as for the Euro devaluing....

    I'm not holding my breath or betting against that happening.

    The Euro is much stronger than the American dollar, and probably always will be because the US has a structural trade imbalance versus the rest of the world which NO ONE IN THE UNITED STATES WANTS TO CORRECT OR EVEN ACKNOWLEDGE.

    After the Euro was created in short order the US dollar SANK AND SANK versus the Euro and nothing that Europe is going through...

    IS AS BAD IN REAL TERMS AS THE HORRIFIC, CATASTROPHIC REALITY OF THE UNITED STATES TRADE DEFICIT WHICH NEVER...NEVER...NEVER...IMPROVES.

    The Euro will alwasy be stronger than the US dollar.

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  3. Every economist in the US believes in the free trade dogma which is without any empirical evidence or merit...

    And they will all see the US sink completely under the waves and die before any of them will admit that their religion of free trade is totally without merit and was a wrong experiment and idiology from the beginning....

    Getting economists to admit that they were all, always completely and totally wrong about free trade is like....

    Getting Medical Doctors to finally admit that they've been completley wrong about low fat/high carb diets and that high cholesteral causes heart attacks and arteries to clog.

    They will never admit they've been completely wrong regardless of what the evidence is or how obvious their error has been.

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    1. I like the book "Neanderthin", explaining how not eating meat creates cravings that leads to eating a bunch of junk food.

      I also like a book by Covert Bailey who explains the role of exercise physiology, as it relates to the meaning of fitness and addresses how exercise resets our metabolism to be a better calorie burner.

      I also enjoyed the research study by 7th Day Adventists and the benefits they derive from their dietary habits as it relates to longevity and decreased risks of certain types of diseases i.e. from cancers to heart attacks.

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    2. Here is an excerpt from one of those Adventist studies via Wiki:

      Adventist Health Study 1 (AHS-1)[edit]
      An additional study (1974–1988) involved approximately 34,000 Californian Adventists over 25 years of age. Unlike the mortality study, the purpose was to find out which components of the Adventist lifestyle give protection against disease.

      The data from the study have been studied for more than a decade and the findings are numerous – linking diet to cancer[5] and coronary heart disease.[6][7]

      Specifically[4]

      On average Adventist men live 7.3 years longer and Adventist women live 4.4 years longer than other Californians.
      Five simple health behaviors promoted by the Seventh-day Adventist Church for more than 100 years (not smoking, eating a plant based diet, eating nuts several times per week, regular exercise and maintaining normal body weight) increase life span up to 10 years.
      Increasing consumption of red and white meat was associated with an increase of colon cancer.
      Eating legumes was protective for colon cancer.
      Eating nuts several times a week reduces the risk of heart attack by up to 50%.
      Eating whole meal bread instead of white bread reduced non-fatal heart attack risk by 45%.
      Drinking 5 or more glasses of water a day may reduce heart disease by 50%.
      Men who had a high consumption of tomatoes reduced their risk of prostate cancer by 40%.
      Drinking soy milk more than once daily may reduce prostate cancer by 70%.

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    3. The next study which is ongoing reports the following;

      Adventist Health Study 2 (AHS-2)[edit]
      The current study which began in 2002 with a goal of 125,000 Adventists continues to explore the links between lifestyle, diet and disease among the broader base of Seventh-day Adventists in America and Canada. As of May 2006 it had an enrollment of 96,741.[8]

      Dr. Gary Fraser with a team of researchers from the School of Public Health at Loma Linda University is conducting the study which is funded by the National Cancer Institute. In July 2011, National Institutes of Health awarded AHS-2 a $5.5 million 5-year grant to continue the study.[9][10]

      While the study is on-going, some findings have been reported:

      "The 5-unit BMI difference between vegans and nonvegetarians indicates a substantial potential of vegetarianism to protect against obesity. Increased conformity to vegetarian diets protected against risk of type 2 diabetes after lifestyle characteristics and BMI were taken into account. Pesco- and semi-vegetarian diets afforded intermediate protection."[11]
      "A vegetarian dietary pattern is associated with a more favorable profile of MRFs and a lower risk of MetS."[12]

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    4. However, the first major study of Adventists began in 1960 here we have the "Adventist Mortality Study".

      Adventist Mortality Study[edit]
      The first major study of Adventists begun in 1960, has become known as the Adventist Mortality Study. Consisting of 22,940 California Adventists, it entailed an intensive 5-year follow-up and a more informal 25-year follow-up.

      "...[The] Adventist Mortality Study (1960–1965) did indicate that Adventist men lived 6.2 years longer than non-Adventist men in the concurrent American Cancer Society Study and Adventist women had a 3.7-year advantage over their counterparts. These statistics were based on life table analyses."[3]

      Specifically, comparing death rates of Adventist compared to other Californians:[4]

      Death rates from all cancers was 60% lower for Adventist men and 76% lower for Adventist women
      Lung cancer 21% lower
      Colorectal cancer 62% lower
      Breast cancer 85% lower
      Coronary heart disease 66% lower for Adventist men, 98% lower for Adventist women

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    5. As for the cravings mentioned in the book Neanderthin, the author believed that this was a result of people trying to eliminate fat, found in red meats, which caused people to crave and eat all sorts of "junk food".

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    6. ... which the author contends contributes greatly to the current obesity epidemic in the U.S.

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    7. So here you have two competing perspectives, and I believe both have merit, but I favor vegan most of the time when prepared properly. And Adventists have a pretty unique set of cookbooks I must admit. Anyway, Vegan vs Carnivore, your choice. "Live long and prosper".

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  4. Dr.P now once again blaming the Germans for this and that...

    I don't think they're conerned about inflation at all in this situation. The reason why they are adopting a restrictive, AUSTERE program on the others is because under this system there is no choice. The borrowers who can't repay their debts cannot repay them out of any scenario of economic growth if more money were lent to them. The problem is that these countries cannot make their own currency like the US does....

    And therefore they can only borrow instead of having a fiat currency to bail them out. Under this terrible scheme, which they adopted, they have no choice than to have austerity...

    And that's a bitch. It doesn't improve anything.

    But there's no alternative if they are to stay in the Euro...which to me I think they should never have joined in the first place.

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  5. On that subject, concerning Japan...

    http://www.zerohedge.com/news/2014-09-14/why-collapse-abenomics-important-its-large-scale-failure-keynesian-stimulus-real-tim

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  6. Regarding the looming breakup of nation states, the hazard in this is that these smaller fiefdoms become easier prey for corporate ultimatums: give us a favorable tax rate or we'll just take our business elsewhere.... Is that what you call entrepreneurialism?

    What is best for Europe, and of course for the US as well, is a decentralized federalism. Let the central gov't deal with the transnational corporations, as a check against their tendency to exploit local communities, while being relatively unobtrusive in the self-government of those communities.

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  7. Ponzi scheme? Well then, who better to run it than Madoff? Release the Kracken ! : /

    The whole economy reminds me of the big bang theory anyway....
    "creatio ex nihilo".

    Seems like one big David Copperfield act. i.e. rabbits being pulled out of hats, along with smoke and mirrors and such.

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  8. Our economy reminds me of GM selling stock back when GM could no longer sell Hummers when gas hit $5 per gallon. Instead of making more sub- compact cars they made gas guzzlers. If we as individuals did stupid shit like that... well we know the outcome.

    As for the EU, it does seem doomed to fail. Dr. P I believe you are correct, it seems that these grandiose planners and schemers bit off more than their egos can handle. And I believe you when you say they know very little about the individual countries that comprise the EU. Seems that there is a great disparity in talent, resources etc between these countries that can't be made up by mere wishful thinking. How can the central authorities not submit to every kind of conflict of interest in dealing with each of these countries collectively? They can't in my opinion. There will be winners and (sore) losers. Seems doomed to fail because its human nature, who wants to support the slackers... nobody. Real economic leaders i.e. Germany, sooner or later will get very tired of it IMO, surprised they haven't already frankly. But as Dennis Miller once said; "I could be wrong".


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  9. I think in the long term the Euro is doomed for two reasons one you have totally different economies from 'powerhouse' to 'donkey-button' trying to share it, two nobody really understands Economics least of all Politicians. I studied the 'dismal science' once for three years and apart from putting me in a coma realised the models are fictious and not real world. To their credit the Germans have achieved Economically what they could not militarily and are the 'superpower' of Europe although they are not wildly popular with the Greeks. I am glad we kept the pound and so kind of removed ourselves from the fray. I see the Scotland thing as a lynchpin of NWO. If NWO and single World currency is on, the vote will be yes 48%/no 52% if NWO is a load of tosh! The yes vote will win and the UK may even be 'permitted' to leave the EU after a referendum. We will see on Thursday! Also thanks to Dr P and various folk for book recommendations, as I use this blog and Robert Steel's 5/6 star specials ratings to choose my Kindle stuff.

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  10. What's interesting is that even the regional areas in England are talking of running their own affairs a secession if you like? I'm wondering if this referendum in Scotland is a catalyst for bigger changes? An interesting point is no matter how the vote goes their are still going to be a large minority disaffected so surely the vote won't put an end to that? The strikingly common theme here is all around the world secession is being considered and discussed! And once again we on this board effectively got the scoop!! All roads lead to Brussels doesn't have the same effect does it?

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  11. A trifecta is looming:

    Aka OBAMA'S true identity is about to be disclosed:
    "Universe Shattering".

    OT:

    Hillary's whitewater files were found in her closet, remember?

    Now it's the Benghazi files.

    She never changes her MO.

    http://dailysignal.com/2014/09/15/benghazi-bombshell-clinton-state-department-official-reveals-alleged-details-document-review/?utm_source=heritagefoundation&utm_medium=email&utm_campaign=morningbell&mkt_tok=3RkMMJWWfF9wsRonvKvJZKXonjHpfsX66%2B8pXq%2B0lMI%2F0ER3fOvrPUfGjI4DT8FiI%2BSLDwEYGJlv6SgFQrLBMa1ozrgOWxU%3D

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